Municipal broadband advocates fight off attacks from “dark money” groups

“Social welfare” groups spread industry talking points against public broadband.

Cities and towns that build their own broadband networks often say they only considered the do-it-yourself option because private Internet service providers didn’t meet their communities’ needs. When a cable or phone company’s Internet service is too slow, too expensive, not deployed widely enough, or all of the above, local government officials sometimes decide to take matters into their own hands.

Hundreds of municipal broadband networks have been built around the US as a result, including dozens that have started operating since 2021. The rise of public broadband hasn’t happened without a fight, though. Private ISPs that would rather face no government-funded competition have tried to convince voters that public networks are doomed to become boondoggles.

Opponents of public broadband don’t always attach their names to these campaigns, but it often seems likely that private ISPs are behind the anti-municipal broadband lobbying. Public broadband advocates say that over the past few years, they’ve seen a noticeable increase in “dark money” groups attacking public network projects.

One prominent recent example is the “NoGovInternet” campaign run by the 501(c)(4) Domestic Policy Caucus. NoGovInternet has been fighting the UTOPIA (Utah Telecommunication Open Infrastructure Agency) fiber collective in Utah in what seems to be an attempt to dissuade other cities and towns from joining the multi-community network. The group’s effort included TV ads as part of a campaign that reportedly cost $1 million.

Nonprofits registered as 501(c)(4) “social welfare organizations” are allowed to engage in some political activity. Public broadband advocates suspect that 501(c)(4) groups fighting municipal networks are funded by private ISPs. There’s evidence to support this belief: Even though 501(c)(4) groups don’t have to reveal donors, they sometimes list ISPs as “partners” or as sponsors of a conference.

“It’s just very easy to set up these 501(c)(4)s where you don’t have to reveal the donors,” Gigi Sohn, executive director of the American Association for Public Broadband (AAPB), told Ars.Advertisement

Sohn is a longtime consumer advocate who was nominated by President Biden to serve on the Federal Communications Commission. When Sohn’s nomination stalled in the Senate last year, she said that cable lobbyists and dark money groups had distorted her record and in effect were allowed to “choose their regulators.”

“Social welfare” groups fight public broadband

The AAPB group that Sohn now runs is a 501(c)(6) that represents community-owned broadband networks and co-ops. The 501(c)(6) designation is generally for business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues, the Internal Revenue Service says.

501(c)(6) and 501(c)(4) groups are similar in that they don’t have to reveal donors. But it can be less clear who is behind a 501(c)(4) because of a nebulous phrase: “social welfare organization.” Even the IRS says the 501(c)(4) social welfare designation is an “abstruse concept that continues to defy precise definition.”

The Domestic Policy Caucus is about a decade old but appears to have started its campaigns against municipal broadband in October 2023. The group is led by Patrick Rosenstiel, who is also involved in the National Popular Vote campaign.

Public broadband advocate Christopher Mitchell told Ars that when the COVID-19 pandemic made home broadband access even more important to Americans than it already was, “the cable and telephone companies lost a fair amount of their power and sway in state legislatures. Now, I kind of think they’re trying to figure out how to operate in the new environment.”

Mitchell, director of the Institute for Local Self-Reliance’s Community Broadband Network Initiative, said that in this new environment, it is “obvious that we need more investment in networks” and a bigger focus on making broadband affordable.

“Municipal broadband is something that nearly everyone supports, unless you work for the cable company,” he said. The dark money campaign that tried to tarnish UTOPIA’s image, Mitchell suspects, “is about finding messages that will resonate that these big cable and telephone companies could use in other states.”

When a cable company opposes a municipal network under its own name or a group that it is obviously associated with, they get “laughed out of the city or town,” Sohn said. One example came in 2017 when voters in Fort Collins, Colorado, approved a city broadband network despite a lobbying campaign funded by business and trade groups that Comcast belonged to.

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Attack ads fall flat

The NoGovInternet campaign calls the UTOPIA fiber network a “dystopia” that “is $300 million in debt and still hasn’t achieved its goals. Worse, UTOPIA is trying to spread the debt by convincing more cities to join the scheme. And cities are putting up sales tax revenue as collateral for these risky schemes, meaning budgets for schools, firefighters, and other core government functions are at risk.”

The NoGovInternet donors’ identities may not even be known to people running the campaign. A Salt Lake Tribune article in February said that a “spokesperson for the Domestic Policy Caucus-backed campaign—former Utah House Speaker Greg Hughes—asserted that he, too, was unaware of who was paying for the national ad blitz.”

We contacted the Domestic Policy Caucus, Hughes, and Rosenstiel multiple times for this article but did not receive a response.

After a rash of attack ads, UTOPIA issued a response in December 2023 saying that “it’s because of the inability of other Internet providers to meet the requests of communities across Utah that we are often asked to help build out the infrastructure, lead project management, and deliver services to the home on major high-speed Internet projects.”

“Today, over 60,000 households and business owners in 20 cities are UTOPIA Fiber customers and use our Open Access model to enjoy a better quality of life with blazingly fast Internet speeds offered at competitive and affordable prices,” the group said.Advertisement

In a phone interview, UTOPIA officials told Ars that the attack ads weren’t successful. “I think it brought a lot of awareness of what we do and why UTOPIA was founded,” Chief Marketing Officer Kim McKinley said. “I don’t think that we’ve really seen any negative repercussions of this campaign. I think that people see it for what it is.”

Project officials said that while UTOPIA has debt—which is not uncommon for a major infrastructure project—its finances have gotten much healthier since a new management structure was put in place in 2009. “I think fiber networks provide public benefit and are worthy of paying for and subsidizing, but that’s actually not what we do. We issue debt and then we plan to pay for that debt with our revenues,” UTOPIA Executive Director Roger Timmerman said.

More cities and towns could join UTOPIA, which is an interlocal entity that owns and manages the network and is made up of the cities and towns that participate. Because UTOPIA is an open access network, private companies offer Internet service over the lines.

“There’s a lot of cities at various levels of considering doing a fiber project… at any given time, there’s probably 10 or more cities in some sort of conversations with us,” Timmerman said.

Groups help ISPs protect their footprint

The Domestic Policy Caucus also runs a new group called Mass Priorities that is lobbying against municipal networks in Massachusetts. In April 2024, the group urged the town of Fairhaven to reject a proposed network, calling the potential broadband service “an unneeded pet project” and “an example of misplaced priorities.”Advertisement

The Domestic Policy Caucus said last month that its Mass Priorities campaign is expanding across the state to sound “the alarm on potential threats to crucial municipal priorities.” This includes a billboard in West Springfield that says, “No Blank Checks for Government Broadband.”

Though UTOPIA and other networks continue in the face of attacks, dark money campaigns have stalled potential broadband projects in other states. Peggy Schaffer, a former state broadband official in Maine, has been tracking dark money efforts in her home state and other parts of the US. A group called the Alliance for Quality Broadband, which has ties to Charter Communications, fought against government-run networks in Schaffer’s state.

The lobbying efforts are “essentially political campaigns against municipally owned networks,” Schaffer told Ars. “Their intent is to convince the public, the voters, that spending on municipal networks is a waste of money and that government-owned networks are bad and that they usually fail.” Schaffer, who retired from a job as executive director of the ConnectMaine Authority in 2022, is now on the American Association for Public Broadband’s board of directors.

In Schaffer’s view, the dark money groups are working on behalf of private ISPs to “protect their footprint.” Schaffer said a few attempts to build municipal networks in Maine communities went “down in smoke” after dark money groups flooded residents with talking points that seemed to be straight out of the telco-industry’s playbook.

In those cases, “the community wasn’t prepared for professional mailings popping onto people’s doors,” big Facebook ad campaigns, and full-page newspaper ads, she said. “Some of it is the community was sort of taken by surprise and didn’t really have the resources to fight back… once a full-page ad comes out in the local paper saying that ‘this citizen effort is bad and it’s going to be deep in debt and you guys are going to owe so much money,’ it’s sort of hard to have a conversation that combats that.” The AAPB exists partly to help communities fight back against these campaigns, she said.

Utah Taxpayers Association

UTOPIA’s expansion was also targeted by the 501(c)(4) Utah Taxpayers Association. After the City Council in Bountiful, Utah, voted unanimously in May 2023 to partner with UTOPIA Fiber, the Utah Taxpayers Association “hired another group called Gather Utah to solicit signatures that would have forced the city to halt the network until the matter could come up for a vote on November’s ballot,” a Light Reading article said.

A Bountiful city government presentation in July 2023 alleged that people gathering signatures for the Utah Taxpayers Association “have not been honest with residents” about the purpose of the petition and who was sponsoring it. After project supporters fought back, “enough people took their name off the petition that it failed,” Sohn told Ars.

The Bountiful government presentation said that city officials decided to build the network in part because Comcast and CenturyLink “provide fiber to only select neighborhoods in the city.” The presentation also said that Comcast and CenturyLink “are or have been members of” the Utah Taxpayers Association.

Comcast, AT&T, and CenturyLink (also known as Lumen) were listed as sponsors of a Utah Taxpayers Association conference this month and of a similar conference a year ago. A CenturyLink executive, Jennifer Somers, was the chair of the Utah Taxpayers Association board in 2020. Somers later took a job with Comcast as vice president of state government affairs in Utah.

The Utah Taxpayers Association has a much longer history than the Domestic Policy Caucus. Utah Taxpayers Association President Rusty Cannon told Ars that government-run broadband is one of many issues his group has addressed since its founding in 1922 and that the group is not “influenced by contributions by a single member.”Advertisement

Although the group isn’t required to list its donors or members, “many of our corporate members are also sponsors for our annual conferences, and their names are prominently displayed at those events and on our website pages relating to the events,” Cannon wrote in an email. “Comcast, CenturyLink, and AT&T are only a small sample of the many companies from virtually every economic sector that value our work and proudly sponsor our work and our events.”

Cannon argued that in many Utah cities, “taxpayers’ dollars are currently being used to prop up and pay for government-owned networks that should never have been built.”

In October 2023, the Utah Taxpayers Association announced that it “launched a statewide pledge campaign to fight taxpayer-subsidized broadband networks.” The group asked elected officials to sign a pledge to “oppose and vote against efforts to fund, through taxpayer borrowing or spending, government-owned or subsidized broadband networks in areas and locations that already have access to high-speed Internet.”

So far, 36 elected officials and candidates have signed, the group says. The list includes various city councilors and state lawmakers. Another signer of the pledge is Republican John Dougall, who is Utah’s elected state auditor and is running for Congress. Dougall wrote an op-ed in April 2024 slamming UTOPIA and Provo’s iProvo network as costly failures.

Cannon said use of the phrase “dark money groups” when referring to 501(c)(4) organizations “often reveals a stunning level of ignorance.” Cannon pointed to the Supreme Court’s 1958 ruling in NAACP v. Alabama, which held that the NAACP did not have to provide its membership lists to the state. The court decided that “compelled disclosure of affiliation with groups engaged in advocacy may constitute… a restraint on freedom of association.”

Cannon declined to say who is serving on the group’s current board. “We no longer publish or distribute the names of our board members. NAACP v. Alabama provides a strong argument as to why,” Cannon told Ars.

What’s a 501(c)(4)?

“Nonprofit, tax-exempt groups organized under section 501(c) of the Internal Revenue Code may engage in varying amounts of political activity,” says an Open Secrets report on dark money groups. “Because they are not technically political organizations, they are generally not required to disclose their donors to the public. These groups, like super PACs, cannot coordinate spending with political parties or candidates and therefore are allowed to raise unlimited sums of money from individuals, organizations and corporations.”

Open Secrets, a 501(c)(3) that researches campaign finance and lobbying, says that 501(c)(4) is “the most common kind of dark money group.”

“Politically active nonprofits such as 501(c)(4)s are generally under no legal obligation to disclose their donors even if they spend to influence elections. When they choose not to reveal their sources of funding, they are considered dark money groups,” the Open Secrets report said.

Unlike a 501(c)(3), a 501(c)(4) is allowed to engage in substantial amounts of political activity. Well-known examples of 501(c)(4) groups include the National Rifle Association and Planned Parenthood, the report notes.

501(c)(4) groups “may engage in political activities, as long as these activities do not become their primary purpose. The IRS has never defined what ‘primary’ means or how a percentage should be calculated, so the current de facto rule is 49.9 percent of overall expenditures, a limit that some groups have found easy to circumvent,” Open Secrets said.

501(c)(4) groups get their name from section 501(c)(4) of the Internal Revenue Code. As the IRS explains, 501(c)(4) gives a tax exemption to social welfare organizations, which “must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements).”

Donations to 501(c)(4) groups are not tax-deductible, though the groups themselves are exempt from federal income tax. An internal training article used by the IRS says that “section 501(c)(4) remains in some degree a catch-all for presumptively beneficial nonprofit organizations that resist classification under the other exempting provisions of the Code. Unfortunately, this condition exists because ‘social welfare’ is inherently an abstruse concept that continues to defy precise definition. Careful case-by-case analyses and close judgments are still required.”

The “muddled” history of 501(c)(4) exemption

The 501(c)(4) exemption has a “surprisingly muddled history,” a Wall Street Journal article in 2013 said. Section 501(c)(4) derived from a 1913 US law. Decades later, “the IRS expanded the exemption into more political territory, allowing 501(c)(4) groups to engage in lobbying and other political activity,” the article said.

In a 1988 article for the Indiana Law Journal, Case Western Reserve University law professor Laura Chisolm wrote that “the precursor of section 501(c)(4) was enacted as part of the Tariff Act of 1913, apparently in response to testimony of the United States Chamber of Commerce.” At the time, the Chamber of Commerce wanted Congress “to broaden the range of exempt organizations to include ‘civic and commercial’ organizations which could not qualify as charitable, educational, or religious, but whose activities somehow benefited the general public,” Chisolm wrote.

In the middle of the 20th century, the IRS allowed 501(c)(4) to be used for more types of activity. “The notion that the section 501(c)(4) social welfare organization category is an appropriate classification for politically active charitable organizations seems to have originated with the IRS in the 1950s” and “was made explicit in regulations adopted in 1959,” Chisolm wrote.

Chisolm concluded that “the assignment of politically active charitable organizations to the section 501(c)(4) classification is without merit.” She argued:

Comcast only reveals donations of $50K or more

Internet service providers practice varying levels of transparency when it comes to disclosing donations. Comcast published reports listing donations to 501(c)(4) groups in 2020, 2021, and 2022, but only for donations of at least $50,000. The Domestic Policy Caucus and Utah Taxpayers Association are not listed in these disclosures.

Comcast disclosed that it made a 2022 donation to Americans for Tax Reform, the Grover Norquist-run 501(c)(4) that has lobbied against municipal broadband and against regulation of private ISPs.

Verizon also discloses 501(c)(4) donations of $50,000 or more. It gave at least $50,000 to Americans for Tax Reform in 2022 and 2021. We asked Verizon if it would provide details on smaller donations to other groups but did not get a response.

Comcast says it does not donate to 501(c)(4) groups “for the purpose of funding political activity,” but it does donate to such groups for other activity. “Prior to making a contribution to a 501(c)(4) organization or unregulated 527 political organization, Comcast must receive written representations from such entity that Comcast’s funds will be used in a manner acceptable to Comcast, including the assurance that such funds (a) will not be used, directly or indirectly, to make contributions to candidate campaigns, political parties, other organizations registered as political committees, or SuperPACs, and (b) will not be used to make independent expenditures,” Comcast says.

Comcast did not respond to questions about its 501(c)(4) donations.

For several years, a Quaker investment group called Friends Fiduciary submitted shareholder proposals calling on Comcast to disclose more of its lobbying expenditures. The group points out that Comcast’s policy of not donating to 501(c)(4) groups “for the purpose of funding political activity… does not extend to donations to 501(c)(4) organizations that are used for lobbying.”

Friends Fiduciary said that AT&T provides more comprehensive disclosures than Comcast and complained that “501(c)(4) and other organizations operating outside of mandated disclosure requirements leave no way for shareholders to ascertain how much Comcast is spending to support these groups.”Advertisement

As we wrote in 2019, Comcast’s board opposed the Friends Fiduciary proposals as too “burdensome and an unproductive use of our resources.” The most recent such proposal was rejected by Comcast shareholders in 2020.

AT&T offers more extensive disclosures

AT&T’s disclosures of 501(c)(4) donations are more extensive—even donations of less than $20 are disclosed. An AT&T political engagement report released in 2024 said the company “contribute[s] to tax-exempt advocacy organizations that engage in political activities, such as those organized under Internal Revenue Code Section 501(c)(4), where those organizations’ missions align with our policy interests.”

AT&T disclosed a $1,125 donation to the Utah Taxpayers Association in 2022. An AT&T spokesperson told Ars that the “2022 contribution to the Utah Taxpayers Association was for membership fees and sponsorship of its annual meeting and golf tournament, not opposition to government-owned networks.” The company also pointed out that Utah is outside of its wireline territory.

Since 2021, CenturyLink/Lumen has only disclosed 501(c)(4) donations of at least $25,000. It does not list any such donations in its most recent political contribution report. The company’s reports in 2020 and earlier listed smaller donations to 501(c)(4) groups.

“Lumen has a rigorous approval process for contributions to industry and business trade associations and similar organizations (for example, 527 groups, 501(c)(4) groups, and other similar tax-exempt organizations),” the company’s latest contribution report said. “Each proposed contribution must be approved by the Vice President, Public Policy and Government Affairs.”

CenturyLink did not answer questions about specific donations but defended its opposition to government-operated networks. “We know it will take everyone working together to close the digital divide,” CenturyLink said in a statement to Ars. “That’s why we partner with municipalities on their digital inclusion efforts by providing middle-mile infrastructure that supports last-mile networks. We have and will continue to raise legitimate concerns when government-owned networks create an anti-competitive environment. There needs to be a level playing field when it comes to permitting, right-of-way fees, and cross subsidization of costs.”

Charter Communications, which operates under the Spectrum brand name, has posted a policy statement on political activities but does not publish reports on its donations.

Maine problems

Schaffer, the former Maine state government official, noted that dark money campaigns can upend municipal networks even after a vote to authorize a project. In Southport, Maine, a town of 600 people, residents voted in May 2021 to create a fiber network. They voted to reverse that decision about 13 months later.

Charter, the second biggest ISP in the US after Comcast, publicly opposed the Southport effort, Schaffer said. “Charter was pushing back against it. They came to town meetings… and then the flyers just started to hit,” she said.

The Alliance for Quality Broadband (AQB) lobbied against the Southport network and called the reversal vote “an important win for Mainers who want effective solutions that will comprehensively close the digital divide.” Although the AQB is a 501(c)(4) and doesn’t have to reveal its donors, the group’s website lists 30 “coalition partners,” including Charter.

The AQB “posted who their members were and most of them were not in Maine, except for Charter,” Schaffer said. The AQB spent over $2.2 million in 2022.

The Alliance for Quality Broadband’s list of partners used to include the Maine State Chamber of Commerce. The anti-municipal broadband campaign apparently caught the Chamber by surprise.

Chamber President Dana Connors told Maine Public Radio in July 2022 that the group had nothing to do with the campaign and only learned of it when it appeared in the press. The Chamber is no longer listed as an AQB partner.

The Maine Public Radio article said the AQB “helped defeat municipal broadband projects in the tiny communities of Readfield and Southport.” The AQB did not respond to a request for comment.

When contacted by Ars, Charter did not answer questions about donations to the AQB or other 501(c)(4) groups but provided a statement defending its investment in rural areas and advocating for public money to be used only in unserved areas:

Every American should have access to high-speed Internet options, which will require building and deploying connections to 100% of the country and we’re doing our part to make that a reality. Charter’s Rural Construction Initiative investment of approximately $9 billion—a portion of which we will offset with over $2 billion in government support funding—will ultimately connect approximately 1.75 million new homes and small businesses across the country. We’ve consistently advocated for taxpayers’ support dollars to first be prioritized to reach areas that still don’t have the ability to connect to high-speed broadband—not to subsidize additional options for those who are already connected.

(Disclosure: The Advance/Newhouse Partnership, which owns 12.4 percent of Charter, is part of Advance Publications, which also owns Ars Technica parent Condé Nast.)

Traverse City, Michigan

The Domestic Policy Caucus, the group behind NoGovInternet in Utah and Mass Priorities in Massachusetts, also targeted the Traverse City Light and Power fiber network in Michigan. The utility has made fiber available at about 2,000 addresses, Chief Technology and Information Officer Scott Menhart told Ars in March. Its goal is to offer service to everyone in the city, which has over 15,000 residents, within about two years.

Charter showed up to board meetings “trying to convince us not to build” but was “cordial and very nice, just stating the fact that there’s already a network in town,” Menhart said.

The Domestic Policy Caucus was more aggressive and has been active “during the approval processes or any time we’ve talked about expansion,” Menhart said. The group claimed “that we had to take out another loan to cover a failed area. The reality was we actually were borrowing money to expand into another area.”

The project is about more than Internet access. “We were building this for our electrical grid,” Menhart said. “We’re building out a smart grid infrastructure, and we were building fiber… regardless of the telecom component because we need it for innovation at our electric utility.”

On its NoGovInternet website, the Domestic Policy Caucus says that Traverse City Light and Power “had fewer than 25 percent of potential customers signed up,” missed its revenue projections, and “now wants to borrow an additional $10 million to help build the network.”

“If the project continues to flounder, losses will have to be covered by increased customer electricity rates, as is too often the case with broadband networks operated by city-owned utilities,” the group said.

Menhart said the claims are false and misleading. He said that about 40 percent of potential customers have signed up for fiber Internet, and “we are actually hitting all of our target projections.” As for the borrowing, “that’s for expansions. That has nothing to do with our original build,” he said.

“We began making profit on the network to start saving to pay back those original loans. That’s why we’re actually looking at expanding, because it actually just adds capex [capital expenditures], but not a lot of operational expense,” making it possible “to pay back those loans quicker,” he said.

Maintaining public roads—and broadband

Schaffer said that most communities wouldn’t build their own networks if private ISPs had completely met their residents’ connectivity needs, which makes campaigns against those networks even more frustrating.

“It’s very hard for a community to make this decision,” she said. Private ISPs often aren’t interested in filling the gaps in their networks “until the community decides, ‘you know what, we’re going to do it on our own.’ And then suddenly they show up at the door and say, ‘it’s a bad idea,'” Schaffer said.

Sohn said a city or town’s decision to build is difficult because of the upfront cost. “When people hear the upfront money that’s necessary to build these networks, they freak out a little bit,” she said. “But it pays for itself in the long term.”

One common argument against municipal broadband is that communities should instead focus on everything else they already are responsible for, like maintaining roads and funding schools. Schaffer argues that cities and towns operating their own broadband networks is similar to how local governments maintain public roads.

The public road system has fostered innovation such as electric cars and “new business models like UPS and FedEx,” she said. “The innovation that can happen when the public owns the infrastructure and everybody has equal access to it is vastly different, and I equate that to what can happen with the Internet. If it’s a publicly owned network that everyone has access to at the same price, then what can happen over that infrastructure can be very different than if it’s the private sector that owns it.”

A municipal broadband network, Schaffer said, “is a piece of infrastructure that your community is going to own forever.”